Allen,
You may be remembering the old rules. Up until a few years ago, the FRA did not claim jurisdiction over most narrow gauge lines, but they do now. When the new rules were first being written, they almost wound up asserting jurisdition over anything than ran on rails using flanged wheels, but sanity prevailed!
Read this, taken directly from the department of transportation web site.
ยง230.2 Applicability.
(a)
Except as provided in paragraph (b) of this section, this part
applies to all railroads that operate steam locomotives.
(b) This part does not apply to:
(1) A railroad with track gage of less than 24 inches;
(2) A railroad that operates exclusively freight trains and does so only on track inside an installation that is not part of the general system of transportation;
(3) Rapid transit operations in an urban area that are not connected to the general system of transportation; or
(4) A railroad that operates passenger trains and does so only on track inside an installation that is insular, i.e., its operations are limited to a separate enclave in such a way that there is no reasonable expectation that the safety of the public -- except a business guest, a licensee of the railroad or an affiliated entity, or a trespasser -- would be affected by the operation. An operation
will not be considered insular if
one or more of the following exists on its line:
(i) A public highway-rail crossing that is in use;
(ii) An at-grade rail crossing that is in use;
(iii) A bridge over a public road or waters used for commercial navigation; or
(iv) A common corridor with another railroad, i.e., its operations are conducted within 30 feet of those of any other railroad.
(c) See appendix A of part 209 for a current statement of the FRA's policy on its exercise of jurisdiction.
I've added the emphasis.